Rossari Biotech Limited Q3 FY26 Earnings Call Summary

Summary

Rossari Biotech Limited - Q3 FY26 Earnings Call Summary Monday, January 19, 2026 4:00 PM

Event Participants

Executives 3 Edward Menezes (Promoter & Executive Chairman), Ketan Sablok (Group CFO), Sunil Chari (Promoter & Managing Director)

Analysts 4 Atishray Malhan (Abakkus Mutual Fund), Ranvir Singh (Nuvama Wealth Management), Rehan Saiyyed (Trinetra Asset Managers), Sanjesh Jain (ICICI Securities), Tanvi Warekhar (Anand Rathi Institutional Equities)

Financials & KPIs

Geographic & Segment Commentary

• Textile Specialty Chemicals: Delivered 18% YoY growth, significantly supported by a 30% surge in exports to new markets including Turkey, Uzbekistan, and Morocco. Domestic demand remains soft due to tariff uncertainties affecting major end-customers like Welspun and Indo Count, although December saw a temporary recovery.
• Home, Personal Care and Performance Chemicals (HPPC): Reported 11% YoY growth despite muted domestic business and low sentiment in Europe. Management is pivoting toward the MENA and Middle East regions to offset European softness, with high expectations for newly approved bio-surfactants by global MNCs.
• Animal Health and Nutrition (AHN): Achieved robust 39% YoY growth driven by key account management and expansion into Bangladesh and Nepal. A new trace mineral and vitamin premix plant is slated for commissioning in Q4 FY26/Q1 FY27 to further bolster volumes.
• International (Exports): Continued as a primary growth driver with a 26% 9M FY26 growth rate, reaching a 30% share of total revenue. Strategic focus remains on deepening wallet share in Southeast Asia and Africa, supported by a forthcoming formulation facility in Thailand.

Company-Specific & Strategic Commentary

• Ethoxylation Capacity Ramp-up: The new 15,000 MTPA unit at Unitop is currently at 10-15% utilization; optimal utilization is expected within 2 years. Ethylene Oxide (EO) supply remains a constraint until Q3 FY27 when supplier expansions are expected to come onstream.
• Saudi Arabia Greenfield Initiative: The Board granted in-principle approval for a specialty chemicals facility in KSA to leverage 35% lower raw material costs and proximity to Europe/MENA markets. An initial $8 million equity infusion was approved for evaluation, with total capex expected to be “substantially higher.”
• B2C & Institutional Rationalization: Management is evaluating a potential exit or partial sale of non-performing consumer verticals to stop cash burn. A sale could potentially infuse ₹150 crores into the company, helping restore consolidated EBITDA margins to the 15% level.
• Product Innovation: New R&D-led products now contribute over 20% of sales, with a specific focus on high-margin bio-surfactants and “green” chemistries approved by global consumer majors.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Saudi Arabia Strategic Rationale

• Question: Why expand to KSA when most Indian chemical companies stay domestic? (Sanjesh Jain)
• Answer: KSA offers a 35% cost advantage on raw materials due to its petrochemical hub status. It provides better proximity to Europe and Africa. We have already mapped customers in the GCC and have informal understandings with two major clients (Sunil Chari, Ketan Sablok).

B2C Vertical Performance

• Question: How are you addressing the sub-15% ROCE and stagnant PAT? (Sanjesh Jain)
• Answer: The B2C segment is currently a drag on profitability. We are re-evaluating this vertical and may take a “call” in the next few quarters. Selling the consumer business could bring in ₹150 crores and immediately boost margins by ~200-300 bps (Ketan Sablok, Sunil Chari).

Capacity and Operating Leverage

• Question: When will operating leverage from the new Dahej and Unitop capacities kick in? (Rehan Saiyyed)
• Answer: Optimal utilization will take approximately 2 years (reaching ~90% by 2027). We expect the margin profile to improve gradually as these units ramp up from the current 10-15% utilization (Ketan Sablok).

Export Growth and Tariffs

• Question: Are domestic textile volumes being impacted by global tariffs? (Atishray Malhan)
• Answer: Yes, large customers like Welspun have been impacted, leading to soft domestic demand. However, we offset this via 26% growth in exports, adding new stock points in Turkey and the Philippines (Ketan Sablok).

Key Takeaway

Rossari Biotech delivered a steady Q3 FY26 with 13% revenue growth, primarily powered by a 26% surge in exports and strong performance in the Animal Health segment (+39% YoY). While consolidated EBITDA margins remained compressed at 11.8% due to B2C losses and capacity ramp-up costs, the core B2B segment maintained a healthier ~14% margin. Strategically, the company is pivoting toward international manufacturing with a proposed greenfield plant in Saudi Arabia to capture a 35% raw material cost advantage and better serve the MENA/European markets. Management is also actively considering the divestment of its non-core B2C business, which could provide a ₹150 crore cash infusion and significantly accretive margin impact. Looking ahead, the company remains focused on ramping up its new 15,000 MTPA ethoxylation capacity and scaling its high-margin bio-surfactant portfolio, though near-term margins will likely remain range-bound until Ethylene Oxide supply constraints ease in late FY27.